Best Car Stocks in India:Analysts expect India's auto industry to return to growth after years of drought. Falling unemployment, rising incomes, and rapidly growing demand for credit could lead to car sales. In hopes of these big potential gains, let's take a look at the best Indian car stocks for 2023 that investors can add to their watch list.
But before we rush into the list, let us take some space to briefly look at the landscape of the Indian auto industry.
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An Overview of the Indian Automotive Industry
All segments of the auto industry have been in decline for the past five years. The following figures from the Society of Automobile Manufacturers of India highlight the grim situation with unit sales in recent years.
(numbers in hundreds of thousands)
| category | 2017-18 | 2018-19 | 2019-20 | 2020-21 | 2021-22 |
| Passenger Vehicle (PV) | 40.20 | 40.28 | 34.25 | 30.62 | 36.51 |
| PV - YoY growth/decrease (%) | 5,75% | 0,20% | -14,99% | -10,58% | 19,22% |
| Commercial Vehicle (CV) | 8.95 | 12th of November | 7.57 | 6.25 | 8.06 |
| CV - YoY growth/decrease (%) | 10,51% | 24,23% | -31,97% | -17,42% | 28,90% |
| Tricycle (3-W) | 10.22 | 12.69 | 11.33 | 6.15 | 7.58 |
| 3-W – YoY growth/decrease (%) | 30,43% | 24,13% | -10,71% | -45,75% | 23,34% |
| Two wheels (2-W) | 231.55 | 245,00 | 210.33 | 183.50 | 177.15 |
| 2-W – YoY growth/decrease (%) | 16,16% | 5,81% | -14,15% | -12,76% | -3,46% |
However, there is a silver lining as sales of PV, CV and 3-wheelers are expected to grow by 19.22%, 28.90% and 23.34%, respectively, in fiscal year 2021 -22. Rising disposable income, improving monsoons, declining inflation, stabilizing fuel prices, and falling commodity costs will bring growth to the Indian auto industry in the coming years.
Best Indian Car Stocks for 2023
Now let's move on to the best car stocks in India for 2023.
top car stocksIn India#1 -maruti suzuki
| CMP | 8305,0 JPY | Market Capitalization (Cr.) | 250,000 rupees |
| earnings per share | 201 rupees | share price to earnings ratio | 41.4 |
| RoCE | 8,95% | Srna | 7,25% |
| valor nominal | 5.0 rupees | Value in books | 1893 rupees |
| The promoter holds | 56,4% | Value in books | 4.39 |
| Debt-for-equity swap | 0,01 | dividend yield | 0,73% |
| net profit rate | 4,43% | Operating margin | 6,51% |
maruti suzuki india ltd. (MSIL) was established by the Government of India in 1981 as Maruti Udyog. Suzuki Motor Corporation (SMC) was a secondary partner at the time, initially supplying cars for sale in the country. Over the years, SMC has increased its stake, reaching 56.4% ownership in 2013.
Maruti has become the largest passenger car manufacturer in India with a total annual production capacity of around 2.25 million units. 1.65 million units were sold in FY22. In November 2022, its market share will be 41.30%.
Its product portfolio includes best-selling brands such as Baleno, Ignis, Ciaz, WagonR, Dzire, Swift and many more.
The company exports automobiles to more than 100 countries around the world. Dzire, Baleno and Swift were its top three export models in the last financial year.
It allocated a huge investment of Rs 1040 crore for the production of electric vehicles and batteries. This is in line with the plan to launch electric vehicles in India by 2025.
MSIL is a debt-free stock with a consistent payout rate of over 30% over the past six years. It reported sales of Rs 8,833 crore and profit of Rs 3,880 crore in FY22.
top car stocksIn India #2 -
| CMP | 1234 rupees | Market Capitalization (Cr.) | 155,000 rupees |
| earnings per share | 74 JPY | share price to earnings ratio | 18.4 |
| RoCE | 11% | Srna | 14,2% |
| valor nominal | 5.0 rupees | Value in books | 406 JPY |
| The promoter holds | 19,4% | Value in books | 3.04 |
| Debt-for-equity swap | 1,65 | dividend yield | 0,94% |
| net profit rate | 7,69% | Operating margin | 16,30% |
Mahindra & Mahindra Ltd. (M&M), part of the Mahindra Group led by Anand Mahindra, is one of the largest automobile manufacturers in India. It manufactures a wide range of vehicles, including passenger cars (SUVs), light, medium, and heavy commercial vehicles, farm equipment, buses, and more.
Scorpio, XUV 700, Thar, Bolero, Blazo, Cruzio, Alfa and Treo are some of the premium brands of this automobile firm.
It was founded in 1945 as Mahindra & Mohammed, but later M.G. changed its name to Mahindra & Mahindra. One of the founders, Mohammad, left the company and moved to Pakistan. It started as a steel trading company but has since slowly expanded into automobile assembly and manufacturing. Eventually, it began producing light commercial vehicles and farm tractors.
Its 20 production facilities achieved sales of 455,570 vehicles and 354,698 units of farm equipment in fiscal year 2022. The chart below highlights M&M manufacturing operations across India.
In addition to manufacturing cars, M&M also deals in auto financing through its subsidiary Mahindra & Mahindra Financial Services. It has recently ventured into other types of products such as personal loans, mortgages, insurance, etc.
In addition, M&M is involved in the hospitality, infrastructure, retail, logistics, steel trading and processing, IT business, and other industries through its various subsidiaries.
top car stocksIn India #3 -tata motors
| CMP | 394 rupees | Market Capitalization (Cr.) | 140,000 rupees |
| earnings per share | -22.19 rupees | share price to earnings ratio | -15,4 |
| RoCE | 1,4% | Srna | 22,3% |
| valor nominal | 2.0 rupees | Value in books | 78,8 JPY |
| The promoter holds | 46,4% | Value in books | 5 |
| Debt-for-equity swap | 5.52 | dividend yield | 0,00% |
| net profit rate | -4% | Operating margin | 8,8% |
Part of the Tata Group Software Group, Tata Motors (TaMo) is a leading automobile manufacturer with a global presence. The product range includes sedans, luxury cars, SUVs, buses, trucks, and defense vehicles.
The TaMo company was founded in 1945, initially producing locomotives and other engineering products. Little by little he began to deal with the production of commercial vehicles, passenger cars and much more.
Tata's automotive division has also grown organically and inorganically over the years, with the acquisition of Britain's Jaguar Land Rover and South Korea's Daewoo truck company.
However, it has not been an easy journey for Tata's automotive arm. Fiscal 2019 began with heavy losses due to overpriced acquisitions and declining market share. Only recently, in fiscal years 21 and 22, did it succeed in reining in cost of goods inflation and declining market share.
Tata Motors Limited Revenue Department
The Tata Motors board is considering a public listing of the Tata Technologies subsidiary as part of a short-term sale plan. Tata Technologies. It provides technical solutions for the automotive, industrial, aerospace and related fields of engineering and manufacturing.
top car stocksIn India #4 -Bajaj Auto
| CMP | 3591 rupees | Market Capitalization (Cr.) | 105,000 rupees |
| earnings per share | 202 rupees | share price to earnings ratio | 18.6 |
| RoCE | 23,4% | Srna | 19,0% |
| valor nominal | 10,0 JPY | Value in books | 900 JPY |
| The promoter holds | 54,8% | Value in books | 3.99 |
| Debt-for-equity swap | 0,0 | dividend yield | 3,90% |
| net profit rate | 16,4% | Operating margin | 15,9% |
Bajaj Auto was founded by Jamnalal Bajaj in the mid-1940s. The company initially imported and sold 2- and 3-wheelers in the country. At the end of the 50s, it received a production license and began to produce scooters.
Bajaj Auto has become the world's most valuable two- and three-wheeler company, with a presence in more than 70 countries. It manufactures famous motorcycle brands including Pulsar, Avenger and Platina and Bajaj RE 3-wheelers.
In addition, Bajaj Auto owns a 49.9% stake in the parent company of sports motorcycle manufacturer KTM Group. It manufactures KTM and Husqvarna motorcycles at its Maharashtra factory and exports them all over the world.
Despite the decline in the industry, the company increased its share of the domestic two-wheeler market from 15.7% in fiscal year 2018 to 18.2% in fiscal year 22. It has also conquered the market in the 3-wheel vehicle segment in the last three years.
The impact is evident in Bajaj's continued rise in profit from Rs 4,219 crore in FY18 (ex-FY21) to Rs 6,166 crore in FY22. The consistency of the income also allows the geographical diversification of the business since exports represent more than 50% of sales.
top car stocksIn India #5 -eicher motors
| CMP | 3200 rupees | Market Capitalization (Cr.) | 87 500 JPY |
| earnings per share | 85,40 JPY | share price to earnings ratio | 37.50 |
| RoCE | 18,3% | Srna | 14,0% |
| valor nominal | 1.0 rupees | Value in books | 486,00 JPY |
| The promoter holds | 49,2% | Value in books | 6.59 |
| Debt-for-equity swap | 0,01 | dividend yield | 0,66% |
| net profit rate | 16,3% | Operating margin | 21,2% |
Eicher Motors is the holding company of the renowned Royal Enfield (RE), international leader in the middle segment of the two-wheeled market (250cc-750cc). In addition, it also manufactures trucks and buses in India and is responsible for the sale, distribution and after-sales service of Volvo buses.
Since its creation in 1948, Eicher Motors has gone through changes in ownership, the sale of its tractor and engine businesses, the acquisition and subsequent merger of Royal Enfield, and a joint venture with the Volvo Group.
Eicher sold motorcycles worth 5.95 lakhs in FY22 and has a 90% market share in the Indian midsize motorcycle segment. Furthermore, through its joint ventures, it sold 57,077 vehicles, consolidating its 29.3 percent share in the Light CV and Medium Duty CV segments in India.
RE has more than 2,100 retail stores and 3 manufacturing plants in India. It has two design centers in the UK and India and generates the majority of Eicher's revenue.
Eicher is a debt-free stock and the promoters own 49.2% of the shares. It has high operating and net margins and adequate returns.
List of Best Car Stocks in India 2023
Above, we have looked at the top five auto stocks in India for 2023. The list below shows more of these stocks.
| Company Name | CMP (rupia) | Market Capitalization (Rs Cr) |
|---|---|---|
| maruti suzuki | 8,305 | 250.000 |
| Mahindra & Mahindra | 1,234 | 155.000 |
| tata motors | 394 | 140.000 |
| Bajaj Auto | 3,591 | 105.000 |
| eicher motors | 3.200 | 87 500 |
| Hero Motor Company | 2,638 | 53.000 |
| televisores electric co., ltd. | 1,011 | 48.000 |
| Ashok Leyland | 138 | 41 500 |
| Ride with Kubota | 2,013 | 26 500 |
in summary
We are now nearing the end of our article on the best Indian auto stocks for 2023. It is considered a good strategy to concentrate industries to gain potential gains from an industry boom. However, one must be optimistic about understanding the industry.
Do you think the car boom has arrived or is there still a long time ahead? How can you tell us in the comments below?
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Vikarp Misra
Vikalp Mishra graduated in Commerce from the University of Delhi. He likes to write about finance, money and business. He is a voracious reader with a genuine interest in investing. Email him at vikalp.mishra@tradebrains.in.
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